MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.3 percent in early trade. It has risen more than 14 percent since late June to hit a 1-year high last week. Japan’s Nikkei .N225 rose 0.4 percent. Elsewhere in the region, Hong Kong .HSI slid as investors sold financials, while mainland China markets .SSEC inched higher.

“China’s stock markets have benefited from Brexit-related capital flows but that impact is fading and we are cautious on the market outlook given increasing signs of economic weakness,” said Francis Cheung, head of China and Hong Kong strategy at brokerage CLSA.

While Hong Kong stocks have rallied 18 percent since late-June, on a price-to-earnings basis, it still remains around one standard deviation below a 20-year average, indicating investors are not fully convinced about the durability of the gains.

Compounding the anxiety, recent Chinese economic data has been anything but cheerful. Both exports and imports fell more than expected in July and government officials have repeatedly said the economy is facing downward pressure.

However, the pessimism around China has been balanced by growing optimism around emerging markets as some investors such as bond giant PIMCO are slowly turning more bullish, citing a rebound in growth and improving economic fundamentals.

On a year-to-date basis, MSCI’s emerging market index has outperformed its developed markets counterpart on a total returns basis, with most of the gains flowing through in the past two months, according to Thomson Reuters Datastream.

US housing-related stocks jumped 2 percent .HGX after the Commerce Department reported new US single-family home sales soared unexpectedly in July to near nine-year highs.

The upbeat housing data added to market uncertainty over whether the Federal Reserve will raise US interest rates this year.

Global central bankers gather in Jackson Hole, Wyoming, later this week with investors focused on a speech by Fed Chair Janet Yellen on Friday, hoping for more clues on policy.

In currency markets, the spike in new US home sales pushed the dollar to 94.6 against a trade-weighted basket of currencies =USD after a drop of more than 2 percent so far this month.

The Australian dollar AUD=D3 looked set to add to recent gains as Australia’s relatively higher interest rates attracted overseas investors.

Oil prices tumbled, reversing early gains, after the American Petroleum Institute (API) reported on Tuesday that US crude inventories rose by a surprising 4.5 million barrels last week. “We are seeing a little reaction to the API data which has posted higher inventories,” said Ric Spooner, chief market analyst at CMC Markets. Brent crude LCOc1 fell 0.7 percent to $49.61 a barrel, while US West Texas Intermediate (WTI) crude CLc1 slipped 0.9 percent to $47.65 in early deals. -Reuters